Tag: Great Recession

The Healing US Job Market and How We All Forgot About the Great Recession


The January jobs report suggests the nearly nine-year-old economic expansion remains plenty capable of generating solid job growth: 200,000 last month and an average of 192,000 over the past three months. More interesting, it provided fresh evidence that a tightening labor market is also capable of accelerating wage growth. The 0.3% monthly rise in average hourly earnings, following an upwardly-revised 0.4% in December, pushed the 12-month rate up to 2.9%, the highest reading in nearly eight years.

All good enough for Capitol Economics to declare, “the acceleration in average hourly earnings isn’t an outlier.” And JPMorgan thinks it “now looks like the tightness in labor markets is showing through to a gradual acceleration in wage growth.” Indeed, it seems the Wall Street consensus is that before long, we’ll start seeing month-after-month of 3-handle jobless rates. And hopefully even stronger wage growth.

Which is all very odd given all the concern in recent years about how trade, technology, Obamanomics, and even the severity of the Great Recession meant the US job market was structurally and perhaps permanently damaged. Now it seems a simpler, though less sexy, answer was more likely the correct one: The Great Recession and Financial Crisis were so severe, it was going to take a good long while for labor markets to heal. Lots of slack needed to be soaked up. Lots, even more than we thought.

Did Hillary Clinton Really Just Blame the Bush Tax Cuts for the Financial Crisis? Does Bill Agree?


Hillary-Clinton-6-14-15-Reuters-500x293During her presidential announcement speech over the weekend, Hillary Clinton offered this interesting explanation for the Financial Crisis:

We’re still working our way back from a crisis that happened because time-tested values were replaced by false promises. Instead of an economy built by every American, for every American, we were told that if we let those at the top pay lower taxes and bend the rules, their success would trickle down to everyone else.

What happened? Well, instead of a balanced budget with surpluses that could have eventually paid off our national debt, the Republicans twice cut taxes for the wealthiest, borrowed money from other countries to pay for two wars, and family incomes dropped. You know where we ended up.

On the Continuing Political Aftermath of the Great Recession and the Financial Crisis


In my new The Week column, I write about the GOP’s problem — particularly Jeb Bush’s — with the Great Recession and Financial Crisis: Republican George W. Bush happened to be president when it happened. That is a tough-to-remove stain on the Bush brand and the GOP brand. Now as I wrote awhile back, “Obama didn’t end the Great Recession that Bush didn’t cause.” W.’s tax cuts/budget deficits/income inequality/financial deregulation aren’t the real story.

But life isn’t fair. Presidents get much of the blame or credit for what happens when happens when they’re in the Oval Office. What’s more, the economic collapse has tempered the public’s enthusiasm for pro-market policies. Now it is certainly worthwhile to try and correct the record on causality. I think the GR&FC were more or less a replay of the Great Depression, where the Fed took a modest downturn in the making and made it much, much worse. In their Financial Crisis Inquiry Report dissent, Keith Hennessey, Douglas Holtz-Eakin, and Bill Thomas outline a variety of domestic and international factors: credit bubble, housing bubble, nontraditional mortgages, credit ratings and securitization, financial institutions concentrated correlated risk, leverage and liquidity risk, risk of contagion, common shock, financial shock and panic. In that same report, my colleague Peter Wallison states “the  sine qua non of the financial crisis was U.S. government housing policy.”

Why Those ‘Reagan Recovery’ vs. ‘Obama Recovery’ Comparisons Don’t Tell Us Much



The Drudge Report recently linked (“OBAMA VS. REAGAN ON GROWTH — NOT EVEN CLOSE”) to a Gateway Pundit blog post featuring the above jobs chart, which was first posted at IJ Review.  Now, it is hardly the only or first chart to highlight that the economic recovery after the 1981-82 recession was stronger than the recovery we’ve seen after the 2007-2009 recession. I’ve done a few of them myself. I mean, it’s not a difficult point to argue when economic growth was so much faster in the 1980s. In the 23 quarters since the end of the Great Recession, real GDP is up 14% vs 30% after Really Bad Recession. Or to put it another way, the “Reagan Recovery” was twice as strong as the “Obama Recovery.” The Four Percent Recovery vs. the Two Percent Recovery.

But what conclusions should we draw from that comparison? And how should those conclusions inform both economic policy going forward and responses to future downturns? Now, I am not about to write the definite blog post that answers those questions. Instead, I will ask even more questions: Were the two recessions of a similar kind? And if they weren’t — maybe one was driven by the Federal Reserve, the other by debt-laden balance sheets and financial collapse — does that make a difference in the depth and strength of the subsequent recovery?

The March Jobs Report: Is the Great Recession Finally Over?


Is the US job market back, finally? One interesting data point in the March employment report: the US economy added 192,000 private-sector jobs last month, pushing private payrolls to 116.09 million. That level surpasses the former high of 115.98 million reached in January 2008.

Hardly an insignificant milestone, and one that shows how far the labor market recovery has come. Although the American economy has been growing since summer 2009, a return to prerecession private-job totals is also an important marker. Perhaps, one could say, we’ve even returned to normal.